Human Resources

You are here

Return of Equity

This is a measure of the return that owners of the business make on their investment. In an owner owned business, it represents the rate at which profit is being generated for every currency unit invested (including retained capital). However, as with the Debt to Equity Ratio above, it really comes into its own in businesses that have outside shareholders. It represents the return they can expect their investment to generate for the business which, they hope, will be transferred to them by way of dividends or capital gains on the value of their shareholdings.

The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon

2121 Pennsylvania Avenue, N.W., Washington, D.C. 20433, www.ifc.org

The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon.